The down market of 2008 has been no deterrent for the design-intensive team at The Artisans Group, in East Olympia, Wash. “We’re having the best year ever,” says Chris McDonald, co-owner of the $4.5 million, 25-employee design/build firm.
Surprisingly, a small but growing piece of that success comes from what many remodelers might consider the competition.
In mid-2007, TAG started to offer design services to other contractors in the area. Besides architectural design and interior specifications, this includes several lines of cabinetry, tile, hardware and lighting, along with “samples of everything else,” McDonald says.
He estimates that “other-contractor sales” will constitute roughly 8% to 10% of volume this year, but he hopes to double that percentage in the next year. In the meantime, he sees diversification as a hedge against any slowdown in homeowner sales, a potential source of higher gross profit, and an opportunity to stand out. “No one is even close in our area,” he says.
Plus, he is cognizant of the fact that many small remodelers and builders “have no infrastructure to handle specs and design.” It’s a win-win, he says. “Their game goes up, we sell them design work, happy clients.”
Working the Network
As with homeowners, appealing to contractors is mostly about education and networking.
“I actively set up meetings with new contractors every week,” McDonald says. He’s on the constant lookout for vans, job signs, and other evidence of contractors he hasn’t met. TAG’s “good name in town” makes them receptive to the meetings, he says.
Other strategies include inviting contractors to TAG’s design center for events such as its open house, NAHB Remodelers meetings, and products seminars. The company also recently mailed 50 contractor brochures (slightly different from homeowner brochures), each with a hand-written note inviting them to use the new services, à la carte. A few contractors called, and the rest “got a nice little reminder that we are here and ready,” McDonald says.
Regardless of revenue potential, talking to other contractors is simply a good business practice. To that end, McDonald also strives to mentor other contractors on how they might be more successful.